1. The objectives and scope of the Performance Management.

2. Setting of key Performance Indicators.

3. Performance reporting.

4. Performance management and interventions.

5. Performance Auditing.

Isandla and GAP argue that section 35 implies that Performance Management System is established for internal structures and thus focuses it purely on organisational/management efficiency questions at the exclusion of external social justice and equity issues. Even though the organisations do not fully explain what is meant by this, it could be inferred that they mean that the Bill does not explicitly state that the Performance Management is established for purposes of ensuring sustainable development that prioritises the plight of the historically disadvantaged and the most marginalised sections of the society.

That the Chapter is not explicit on this is true. But read together with other chapters, especially lOP chapter, Bill is not necessarily silent on the issue. It is important to realise that PMS is about monitoring performance of municipalities on IDPs which deal with developmental issues. It is for this reason that section 35 says municipalities must establish PMS in line with the objectives, indicators and targets contained in its integrated development plan. It is in the IDP process where the interests of marginalised are dealt with. To this extent section 23 1(b) obliges municipalities to include those "communities which do not have access to basic municipal services". Even more, section 20 of the IDP chapter invokes section 153 of the Constitution which obliges municipalities to perform its developmental duties.

It is therefore not entirely correct to suggest that Performance Management is internally focussed and does not deal with social justice and equity in developmental terms. On the contrary it could be argued that the entire Bill rests on the principle of transforming local government in a manner that

municipalities address social justice and equity. It could also help to look beyond the law and say how the processes provided for in the legislation could be utilised to ensure that these issues are addressed. In particular, lOP and the setting of key performance indicators.

To start with, SALGA argues that they are the ones who should set general key performance indicators rather than the Minister. This is their longstanding position despite long rounds of discussions with them. This issue needs to be contextualised. In this, it is important to look at what are indicators, what are they used for, who sets them and what are international experiences in this regard. Broadly speaking, indicators are measurement variables used to generate data that could be used for various purposes. Anybody can set indicators, collate data to be used for any purpose. In our case, government which has the responsibility to monitor, support and intervene in local government will set indicators that will yield data to enable pro-active action to remedy the situation, through use of various mechanisms.

There is therefore nothing wrong with government setting national indicators for it is its prerogative. The general indicators the Minister is to set are for government purposes and the process thereof will have SALGA playing a prominent role as an Association of municipalities. This is standard practice internationally where countries have PMS. For example in UK, Australia, New Zealand the governments set KPIs after consultation with associations of local government. There have been instances where associations set indicators but those would either be complimentary to those set by government or set for own limited purposes. In Australia, the associations started performance measurements and would thus set indicators but government is increasingly assuming this responsibility for a number of reasons. In all instances where associations set indicators this was never seen as precluding government from doing so.

It is important to note that internationally, Associations of local government work with government in setting general indicators and support local government in setting local indicators. This is the role we think SALGA should play. Nothing stops the organisation, though, to set own indicators if they so wish but they cannot preclude government from doing so. It would however be desirable that SALGA support the government process of setting a single set of national indicators. The overwhelming support for government setting national indicators by a large number of submissions need to be noted in this regard.

The Gender Commission and Gender Advocacy Group argue that the Bill should recognise the need for KPIs to be desegregated in order to deal with gender questions. This point is noted with appreciation. The question however is, how should this be dealt with? Is it a matter of inserting qualifiers in the Bill or a matter of leaving it to guidelines or regulations? Government would prefer the latter as gender will not only be the variable to look at in dealing with various groupings in communities.

Isandla argue that the Chapter does not consider implications of collating qualitative data given the time and available capacity to do so. This is a real concern. It is easy to collate data on efficiency and output indicators for this come in quantitative terms (figures) and it is the information the municipalities would be in control of. However data on outcomes or impact require research to collate and this usually takes time. Usually, organisations, undertakes surveys and in-depth research to do this.

The Bill requires municipalities to report on indicators on an annual basis. It is doubtful if municipalities will manage to produce data on outcome/impact indicators given the timeframes. It would be proposed that Isandla's submission be seriously noted but deferred to regulations as these are matters of detail.

Isandla further argues that the role of communities in the establishment of PMS, monitoring and evaluation is not clear other than as recipients of the report (yet as part of the public). This is also an important submission given that it is our argument that the system rests on the philosophy that says communities are the key drivers of change at local level. It is important to give life to the provision in section 7(1)(b)(i) by way of reflecting how communities are to be involved. Also it is important to recognise communities as the primary recipients of the report rather than just as members of the public as implied in the Bill. It is crucial to outline processes of reporting, feedback and recourse if communities are unhappy with performance. Important as they are, all of these points may not be dealt with in the body of the Bill but in the regulations as they are matters of detail. For now it may be necessary to insert the word community structures in section 43(a) for it to read:

Cosatu submits that the initial clauses which provide government recourse in the case of poor performance have been deleted without justification. Even more, they argue that Chapter 10 which was initially dealing with interventions has been substantially watered down. What is left is lack of clarity as to what happens when there is perpetual poor performance. The answer to this has been that failure to perform constitutes failure to fulfil an executive function and in that case, provisions of section 98 will kick in. This is true, but clause 98 remains open-ended. It does not state unequivocally what happens when the MECs investigations point to non-performance. It is also not clear what is the relationship between these steps and those of 139 of the Constitution.

There is a need to clearly link or cross-reference clause 98 with the PMS chapter and even more clarify the provision of this clause with the activation of section 139 of the constitution.

The Auditor-General raises a number of issues in this regard. First, he says the Bill should be clear as to who exactly should undertake performance audits. Clause 41 says municipalities, external auditor or the Auditor-General. This provision came when earlier submissions suggested that it is not always the Auditor-General who undertakes audits but external auditors contracted by municipalities as well. The clause therefor sought to provide flexibility and accommodate all available options. The Auditor-General has however highlighted that his office has the authority over all government auditing and where they cannot audit themselves, they procure auditing services for municipalities. This is therefore how external auditors come into the picture. It is therefore necessary to reorganise clause 41 as to read:

This will go a long way to provide the necessary certainty as to who should undertake performance audits.

The AGO also argues that government auditing dealt with in the Auditor-General's Act and therefore it may be inappropriate for the Minister to develop regulations in this regard as clause 4b(f) proposes.

This may be true only to the extent that the regulations encroach on the powers of the Auditor-General. If it is the regulations dealing with peculiarities of municipal performance auditing not dealt with in and aforesaid Act, there should not be any problem with the Minister developing regulations to give practical effect to the provisions of his Act. This would naturally be done in consultation with the AGO.

Further, the AGO makes comments on specific clauses.
Clause 42

It would not be necessary to insert the proposed wording as the concern is covered in clauses 31(a) and 38(d) of the Bill. The municipalities are required to review performance of the previous year against targets and take steps. Besides the regularities will deal extensively with the performance reposts. The insertion about statements by the Auditor-General and the period within which to report will also be dealt within the regulations.

AGO argues that clause 45 should have an additional sub-clause requiring the Minister to state intended remedial action by government given the performance of local government. This can be done by way of inserting 45 ( ) reading"

The AGO would furthermore like to understand what happened to the earlier version which provided for the auditing of the Minister's report. This was deleted because we felt that it may not be necessary as the Minister's report will be based on audited original reports by municipalities.